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Short Summary
Main recommendation: Private jets make economic sense only when the time saved is worth more than the flight's cost, which is most often true for executives with very high hourly values or trips that would otherwise require multiple overnight stops. The video argues that for routes well served by commercial airlines, such as London to Dubai, private jets rarely justify their expense. It illustrates this with Walmart's corporate fleet, which uses private jets for regional vice presidents to turn multi-day store trips into single day trips.
Key Points
- Using a CEO's hourly time value as the test: an average large-company CEO earning $15.6 million a year has an hour worth about $5,750, while a $1 million salary gives an hour worth about $368.
- On London to Dubai, private jets save at most about three hours of airport time, so the CEO's time would need to be worth about $18,300 an hour, a level reached only at roughly $50 million a year.
- Walmart's Bentonville-based fleet of 20 corporate jets, the largest of any American company, is used mainly by regional vice presidents making frequent store visits, with a goal that no one spends a night away from home.
- The Walmart example shows a three-store trip (Rock Springs, Spokane, Great Falls) taking four working days on commercial flights but one day by private jet.
- Private jets become more defensible for long-haul trips with no direct commercial service, such as a non-stop Bentonville to Manila flight with a large executive group.
- A roughly 10 percent increase since 2013 in Fortune 100 executives using corporate jets for personal leisure, and research linking this perk to shareholder returns about 4 percent a year below the market average, suggest that some use is driven by societal status rather than economics.
Details Worth Noting
- Concrete instructions:
- To test whether a private jet is worth it, estimate the value of an hour of the traveler's time, count the hours saved, and compare the total with the charter or operating cost.
- Count hours saved as time that would otherwise be lost to airport processing, connections, and overnight stops, not just flight time, since private jets fly at about commercial speeds.
- For a trip with one passenger, the video's Learjet 45 example at about $4 per mile on 2,900 miles costs about $11,600. Saving three days at about $3,900 per day implies roughly $1 million a year in pay for the trip to break even.
- Filling the plane to its nine-seat capacity lowers the break-even salary to about $111,000 per person, which is below the average Walmart store manager's pay.
- For the Bentonville to Manila case, a chartered Bombardier Global 7500 at about $10,000 an hour (about $150,000 for the trip) is compared with business-class fares of at least $5,000 per person over 26-plus hours and three stops, and the video notes that a $24 million-a-year CEO's 11 saved hours are worth about $97,000.
- Hotels, food, and airline transport costs for overnight stays are not included in the Walmart break-even math, and the video notes they would likely add up to thousands of dollars.
- The video calls private jets very poor for the environment: flying a Global 7500 with a single passenger from Bentonville, the jet would only reach South Dakota before exceeding an average person's annual carbon footprint.
- After the 2008 financial crisis the private aviation industry was hit hard and has not fully recovered; part of the cutback was optics as well as cost-cutting.
Bottom Line
Private jets pay off mainly when the traveler's time is very valuable or when the route has poor commercial access, and the decision often reflects status as much as economics.
